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On February 3, 2025, a federal court in North Dakota ruled that the Council on Environmental Quality (\u201cCEQ\u201d), the federal agency responsible for administering the National Environmental Quality Act (\u201cNEPA\u201d), lacks the authority to issue regulations. This follows a similar ruling issued by the D.C. Circuit Court of Appeals last November where the court determined that CEQ did not have the authority to issue binding regulations. CEQ first adopted regulations to implement NEPA in 1978. The February ruling has resulted in uncertainty over the future of NEPA and how other federal agencies should interact with the statute going forward.<\/p>\n
Background<\/strong><\/p>\n The ruling in State of Iowa v. Council on Envt\u2019l Quality<\/em>, No. 1:24-cv-00089 (D. N.D. Feb. 3, 2025)<\/strong> focuses on the authority of CEQ to issue regulations under NEPA, with the plaintiffs specifically challenging a rule promulgated by CEQ in 2024. Understanding both the statute and the recent rulemaking effort provides context for the court\u2019s decision.<\/p>\n NEPA & CEQ<\/u><\/p>\n NEPA was signed into law on January 1, 1970, and is considered the first major environmental law in the United States. The primary purpose of the law is to \u201cdeclare a national policy which will encourage productive and enjoyable harmony between many and his environment[.]\u201d 42 U.S.C. \u00a7 4321. To achieve that purpose, NEPA provides that prior to carrying out any \u201cmajor federal action,\u201d a federal agency must issue a \u201cdetailed statement\u201d describing the \u201creasonably foreseeable environmental effects\u201d of the proposed action. 42 U.S.C. \u00a7 4332. NEPA defines a \u201cmajor federal action\u201d as an action that is subject to \u201csubstantial federal control and responsibility,\u201d and specifies two possible levels of review. 42 U.S.C. \u00a7 4336e(10).<\/p>\n Under NEPA, the agency carrying out the proposed action, typically referred to as the action agency, will draft an Environmental Assessment (\u201cEA\u201d) or an Environmental Impact Statement (\u201cEIS\u201d) depending on the nature of the action it is taking. According to NEPA, an agency shall prepare an EA for a proposed action that \u201cdoes not have a reasonably foreseeable significant effect on the quality of the human environment.\u201d 42 U.S.C. \u00a7 4336(b)(2). For those actions that are expected to have a reasonably foreseeable significant effect on the quality of the human environment, NEPA instructs agencies to prepare an EIS. 42 U.S.C. \u00a7 4336(b)(1). When drafting an EIS, NEPA requires agencies to include information regarding: (1) the reasonably foreseeable environmental effects of the proposed agency action; (2) any such foreseeable effects which cannot be avoided if the proposal is implemented; (3) a reasonable range of alternatives to the proposed action; (4) the relationship between short-term uses of the environment and the maintenance and enhancement of longer-term productivity; and (5) any irreversible and irretrievable commitments of federal resources which would be involved in the proposed agency action should it be implemented. 42 U.S.C. \u00a7 4332(C). While NEPA requires agencies to conduct environmental reviews of their actions, the statute does not require that an agency take the most environmentally friendly course of action. NEPA is regarded as a procedural action because it requires agencies to follow an environmental review process without mandating a substantive result.<\/p>\n Along with requiring federal agencies to draft detailed statements regarding the environmental impacts of their proposed actions, NEPA also created CEQ. NEPA provides that it is the \u201cduty and function\u201d of CEQ to \u201cassist and advise the President,\u201d gather information about the quality of the environment and analyze whether current trends are interfering with the goals of NEPA, recommend to the President national policies intended to promote the improvement of environmental quality, and to review various activities carried out by the federal government to determine whether such activities contribute to achieving the purpose of NEPA. 42 U.S.C. \u00a7 4344.<\/p>\n After NEPA was enacted, President Nixon issued an Executive Order specifically directing CEQ to issue \u201cguidelines\u201d for federal agencies on how to prepare the EIS and EA documents required by NEPA. Later, in 1977, President Carter issued a separate Executive Order instructing CEQ to draft formal regulations instead of guidelines. The first round of NEPA regulations were issued by CEQ in 1978 and established a framework for implementing NEPA that is largely still in effect today. In 1979, the United States Supreme Court issued an early NEPA decision in a case titled Andrus v. Sierra Club<\/em>, 442 U.S. 347 (1979)<\/strong>. There, the Court was asked to consider whether federal agencies were required to prepare an EIS document prior to making an appropriation request. A unanimous court determined that NEPA did not require an EIS to accompany an appropriation request, and crucially, stated that \u201cCEQ\u2019s interpretation of NEPA is entitled to substantial deference.\u201d<\/p>\n 2024 Rule<\/u><\/p>\n The NEPA regulations CEQ promulgated in 1978 remained largely unchanged until 2020 when the agency updated the regulations for the first time in decades. More information about the exact changes made is available here<\/a>. In 2021, following Executive Order issued by President Biden, CEQ began the process of reviewing the regulations it had adopted in 2020 to determine whether it should reverse the changes. This ultimately resulted in CEQ implementing a two phase rulemaking process to either reverse or modify changes made by the 2020 regulations. CEQ completed Phase 1 of that process in 2022, and Phase 2 in 2024. More information on the two-step process can be found here<\/a>.<\/p>\n The Phase 2 regulations, also known as the 2024 Rule, made numerous changes to NEPA\u2019s regulatory framework. Along with codifying the page and time limits for EA and EIS reports established by Congress under the FRA, the 2024 Rule expanded the scope of public engagement in the NEPA, instructed agencies to take into account the impacts their proposed actions would have on climate change and environmental justice concerns, and gave agencies more clarity on when they could adopt NEPA policy established by another agency. A more in-depth look at the 2024 Rule is available here<\/a>.<\/p>\n The 2024 Rule was finalized on May 1, 2024. On May 21, the state of Iowa together with nineteen other states filed State of Iowa v. Council on Envt\u2019l Quality<\/em> to challenge the regulations. While the initial challenge focused on whether the 2024 Rule complied with NEPA, the plaintiffs amended their lawsuit to argue that CEQ lacked authority to issue regulations at all following a ruling from the D.C. Circuit in late 2024 which found that CEQ was not authorized to issue binding regulations. To learn more about that decision, click here<\/a>. After considering arguments submitted by all parties, the court in State of Iowa v. Council on Envt\u2019l Quality <\/em>concluded that CEQ does not have rulemaking authority.<\/p>\n The Court\u2019s Decision<\/strong><\/p>\n A court in the federal district of North Dakota issued its ruling in State of Iowa v. Council on Envt\u2019l Quality <\/em>on February 3, 2025. The court considered two primary issues: first, does CEQ have the authority to issue rules and regulations; and second, does the 2024 Rule exceed CEQ\u2019s authority under NEPA.<\/p>\n The court began its consideration of whether NEPA grants CEQ rulemaking authority by noting that, according to the Supreme Court\u2019s recent decision in Loper Bright Enters. v. Raimondo<\/em>, 603 U.S. 369 (2024)<\/strong>, when reviewing agency actions carried out under statutory authority, courts should \u201cindependently interpret the statute\u201d to determine whether the agency has acted within the boundaries of its authority. Under NEPA, CEQ is authorized to \u201cmake recommendations to the President\u201d and \u201cdevelop and recommend to the President national policies.\u201d 42 U.S.C. \u00a7 4344. Of the duties specifically assigned to CEQ under NEPA, none specifically grant CEQ the authority to issue regulations. According to the court, \u201cNEPA is not ambiguous [\u2026] the plain text of the statute does not give CEQ authority to issue binding regulations.\u201d However, despite concluding that the text of NEPA alone is enough to establish that CEQ lacks rulemaking authority, the court considers whether the Supreme Court or the President have at any point granted CEQ the ability to issue binding regulations.<\/p>\n After reviewing Andrus v. Sierra Club<\/em> where the Supreme Court noted that CEQ\u2019s interpretation of NEPA should be granted deference by the judiciary, the court in North Dakota concluded that the decision did not actually consider whether CEQ had rulemaking authority. According to the court, Andrus v. Sierra Club<\/em> granted CEQ\u2019s interpretation a level of legal deference, but the Supreme Court failed to analyze whether NEPA granted CEQ the ability to issue regulations. Therefore, the court concluded that the Supreme Court had never properly considered the issue. Similarly, the court considered whether the Executive Order issued by President Carter directing CEQ to draft NEPA regulations actually gave the agency authority to do so.<\/p>\n Article II of the United States Constitution provides that it is the duty of the President to ensure that the laws passed by Congress are \u201cfaithfully executed.\u201d It goes on to stipulate that President must \u201ctake Care\u201d when executing laws. Known as the Take Care Clause, Congress has codified and interpreted this provision of the constitution to mean that the President may delegate to federal agencies any duties that have been \u201cvested in the President by law.\u201d According to the court, Congress was \u201cexplicit\u201d in drafting the text of NEPA. CEQ was granted authority to assist and advise the President. The text of NEPA does not specifically grant CEQ or the President authority to adopt regulations. Therefore, the court concludes that President Carter\u2019s Executive Order did not grant CEQ rulemaking authority because Congress did not authorize the President to do so within the text of NEPA. Therefore, the court concluded that CEQ lacks the authority to issue binding regulations.<\/p>\n After concluding that CEQ lacks the authority to issue regulations, the court nevertheless went on to analyze whether the 2024 Rule complied with NEPA. The court noted that its conclusion that CEQ lacks rulemaking authority necessarily means that the entire 2024 Rule does not comply with NEPA, but would assess the 2024 Rule anyway in the event that another court concludes CEQ does have rulemaking authority.<\/p>\n In considering whether the 2024 Rule complied with the text of NEPA, the court found that some provisions of the Rule did while others did not. In their complaint, the plaintiffs had argued that the language in the 2024 Rule directing agencies to consider environmental justice, climate change, indigenous knowledge, and worldwide effects when drafting EA and EIS documents exceeded CEQ\u2019s authority under NEPA because the text of NEPA does not specifically address those topics. The court partially disagreed. The text of NEPA provides that the President must use \u201call practicable means and measures [\u2026] to foster and promote the general welfare.\u201d 42 U.S.C. \u00a7 4331. CEQ notes that its inclusion of environmental justice and climate change concerns in the 2024 Rule stem from an Executive Order issued by President Biden directing agencies to advance environmental justice and climate change policies. Because inclusion of those two policy concerns in the 2024 Rule stem from a Presidential order that falls within the President\u2019s grant of authority from NEPA to use all \u201cpracticable means\u201d to \u201cpromote the general welfare,\u201d the court determined that part of the 2024 Rule did not violate NEPA. However, the court found that inclusion of indigenous knowledge and global effects concerns did violate NEPA. The inclusion of indigenous knowledge in the 2024 Rule violates NEPA because the term is not defined in the text of NEPA or in the text of the 2024 Rule. Similarly, the court determined that the inclusion of global effects considerations in the 2024 Rule violates NEPA because the statute does not direct the President or CEQ to take into account global concerns.<\/p>\n The court determined that the portion of the 2024 Rule that directed agencies to identify an environmentally preferable alternative when drafting an EIS did not violate NEPA because that has always been a requirement when issuing an EIS. However, the court concluded that the 2024 Rule\u2019s removal of the definition of \u201cmitigation\u201d in the portion of the Rule explaining that NEPA does not require agencies to conduct mitigation was contradictory to CEQ\u2019s authority under NEPA because removing the definition did not necessarily clarify that NEPA does not require agencies to mitigate their actions.<\/p>\n Ultimately, the court concluded that the entirety of the 2024 Rule exceeded CEQ\u2019s authority under NEPA and should be overturned because CEQ does not have rulemaking authority.<\/p>\n Going Forward<\/strong><\/p>\n The immediate outcome of the court\u2019s decision in State of Iowa v. Council on Envt\u2019l Quality <\/em>is that the 2024 Rule has been overturned. Typically, when a regulation is overturned by a court, the previous rule is reinstated. However, the court noted that if CEQ lacked the authority to issue the 2024 Rule, it also lacked the authority to issue the previous regulations as well. While the court did not go so far as to say that the previous NEPA regulations were invalid, the question remains open.<\/p>\n This is the second time in recent months that a federal court has ruled that CEQ does not have rulemaking authority. The parties to the case decided by the D.C. Circuit last November petitioned to have the court rehear the case, which the court has declined to do. It is possible that the parties to that case will seek review from the Supreme Court. In State of Iowa v. Council on Envt\u2019l Quality<\/em>, the parties could choose to appeal that decision to the Eighth Circuit Court of Appeals. If the Eighth Circuit were to overturn the lower court\u2019s ruling and determine that CEQ does have rulemaking authority, that would create a circuit split and increase the chances of the matter coming before the Supreme Court.<\/p>\n In the meantime, it is not entirely clear what these decisions mean for implementation of NEPA, on-going NEPA review processes, or on-going court cases involving NEPA actions. For now, it appears that the pre-2024 regulations are in place, but the legal validity of those regulations remains in doubt.<\/p>\n \u00a0<\/p>\n To read the court\u2019s decision in State of Iowa v. Council on Envt\u2019l Quality<\/em>, click here<\/a>.<\/p>\n To read the text of NEPA, click here<\/a>.<\/p>\n